NEW YORK, NY - Founder and CEO of Kik Ted Livingston speaks onstage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on May 11, 2016 in New York City. (Photo by Noam Galai/Getty Images for TechCrunch)

The creator of popular messaging platform Kik will test the prospects of crypto-based crowdfunding next month, when it begins an initial coin offering that seeks to raise a total of $125 million through the sale of a new Ethereum-based token.

Kik Interactive announced Tuesday it’s closed $50 million in funding from leading crypto investment firms Polychain Capital, Pantera Capital and Blockchain Capital. It aims to raise $75 million more when the token sale debuts on September 12. (Read more about Polychain Capital in our July cover story here.)

The move, which Founder and CEO Ted Livingston is lauding as the “first mainstream adoption of cryptocurrency,” allows Kik to remain independent in spite of reports of stunted user growth and dwindling cash. Kik’s previous capital infusion came from Chinese internet and mobile giant Tencent, which invested $50 million in the Canadian startup back in August 2015 -- earning Ontario-based Kik a $1 billion valuation, unicorn status.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

The offering could more than double Kik’s pre-ICO funding of $120.5 million raised since the firm's inception in 2009.

“Kin will fuel new experiences in communications, information, and commerce inside of Kik, and will also serve as a foundation for a new decentralized ecosystem of digital services, bringing a fair and sustainable business model to the market,” Livingston said in a statement.

The 24-hour sale will comprise a total of 1 trillion Kin tokens, 488 billion of which were pre-sold at a 30% discount. The remaining tokens will be allocated among participants who register by September 9.

The structure of the sale reflects some of the challenges that the crypto community has faced in initial coin offerings. Some sales have been criticized for enabling “whales” to take the majority of the tokens, to later dump them on exchanges for a higher price -- a classic ticket scalper situation.

Others, trying to enable as many users to buy tokens as possible, were called “greedy” for holding uncapped sales.

The Kin token sale aims to avoid both situations by requiring potential buyers to register first, capping the total amount raised, and then limiting the amount purchased per buyer to $75 million divided by the number of registered participants. Assuming some participants purchase less than the max, Kik will then sell whatever tokens are not purchased at a later date.

The Kik ICO is one of the first by an existing non-blockchain-focused company, likely to be part of a wave of other token sales by companies who are not leaders in their sector looking to use a coin to both energize existing users and attract new ones. One of the theories behind ICOs is that they can seed a network among a large group of users, while many non-token-based networks may struggle to get users in the beginning since the utility to any early user is less than to later users who join after many other connections are already on the platform. Many also believe that tokens give their users an incentive to bring friends and family onto the platform.

The trend of existing companies who aren’t industry leaders looking to cryptocurrency to revive their prospects also occurred in 2013 and 2014, when companies like Overstock, Expedia and Dell attracted press attention for announcing that they would accept bitcoin.

Other non-crypto companies that have held or announced token sales this year include InvestFeed, Unikrn, Science and Invest.com.

According to the whitepaper released in May, Kik hopes to drive adoption of the Kin token by leveraging its 15 million monthly active users, most of which fall within the 13-24 age bracket.

Kin’s offering is a clear play to position Kik as a fintech player, a move the firm says has been years in the making. Kik launched a centralized digital currency, Kik Points, in 2014, and Livingston has since set his sights on recreating the dominance of Tencent’s WeChat in the digital payments sphere.

“Three years ago, WeChat was responsible for roughly zero percent of mobile transactions in China. Today, it accounts for about 40 percent,” Livingston said in an April 2017 post on Medium. “The opportunity to be the WeChat of the West remains as wide open as ever.”

I studied business journalism and economics at the University of North Carolina at Chapel Hill. At Forbes, I'm an assistant editor for money & markets. Before, I worked as a marketing & communications assistant at UNC Kenan-Flagler and spent a summer reporting on the...